The Risk of Too Much Charity Reform

April 20, 2000

Charities have never been under greater pressure to improve their internal management.

How the non-profit world does its work is becoming almost as important to grant makers and charity clients as the goods and services that charitable organizations deliver.

The challenge in improving management is not a lack of ideas, however. Even a cursory sampling of back issues of The Chronicle shows the range of reform ideas now pulsing through non-profit organizations. Indeed, one can argue that there is not too little reform at non-profit groups today, but too much. There is a non-profit reform for every ideology—for those who believe non-profit groups should be mostly left alone to do their work as they see fit and for those who believe that non-profit groups should be placed under greater public scrutiny, for those who believe that non-profit organizations should follow the best practices of businesses and for those who believe that the two sectors are, to rephrase a famous maxim, fundamentally alike in all unimportant respects.

The problem in improving performance is that nobody agrees which reforms might actually work. Despite the recent growth in the number of scholars who study non-profit groups, there is little hard research that might show the link between organizational effectiveness and actual results. Do boards really matter to performance? What about strategic planning or alliances? Where does training or technology fit in? And which comes first? There is just not enough research to give a solid answer, let alone a solid recommendation for holding, say, six board meetings a year rather than three, or starting a process to measure whether a charity is making a difference.

The lack of research has not stopped four separate tides, or philosophies, of non-profit management reform from gathering force just offshore. The first tells non-profit groups to adopt a common set of best practices for effective management. The second encourages them to measure results as the path to higher performance. The third encourages them to merge, re-engineer, and downsize. And the fourth tells them to open themselves to the sunshine by making more information available to the public.

Those are the same tides of reform that have pulsed through government and business for the better part of a half century, leading to a million planning meetings but mixed evidence of success. In the federal government, for example, the tides of reform may have done more harm than good, producing a relentless downsizing that has left agencies exhausted and demoralized. There is little evidence that the tides have made much of a difference in the private sector, where management fads move from corporate board rooms to the “Dilbert” cartoon strip with ease. There but for the grace of good fortune goes the non-profit world.

If charities had the opportunity to do more with more, non-profit groups could swim with all four tides, improving their management systems in tandem with mergers and acquisitions, adding the technology to post their Forms 990 on the Internet, and adopting evaluation measures. But this is not a perfect world. Non-profit groups cannot do it all.

Luckily, charities still have time to prevent the damage that the tides of reform have done in government and business. The place to start is to acknowledge that there is no one true way to improve performance. Some non-profit groups would do best by adopting the approach advocated by the Maryland Association of Nonprofit Organizations, which has outlined basic standards for non-profit management and governance, while others would do well to embrace United Way of America’s outline of how to measure results. Still others should think about a strategic partnership, merger, or downsizing. All non-profit groups should make details about their finances and operations easily accessible to the public, but whether they should participate in an Internet-based disclosure system will surely vary by organization.

Non-profit organizations would also benefit from some hard conversation about the costs and benefits of each new reform, subjecting each new idea to its own scrutiny. They need to discuss the results they can expect from adopting a system that measures results and the real costs and benefits of a long-term strategic planning process. They must also think seriously about how much time and energy a successful alliance with another organization really demands. Too many reform ideas are promoted as pure gold when truthful analysis might reveal a core of administrative lead. Too many others are sold as quick and easy when success actually demands years of hard work.

Everyone believes in organizational effectiveness until it comes time to put money and time at risk. Given tight budgets and thin staffs, many non-profit organizations give lip service to the latest reform craze, hoping that it will soon pass over so they can get back to work. The risk is that by asking non-profit organizations to do it all, they will do nothing. After all, the logical extension of doing more with less is doing everything with nothing.

Paul C. Light is vice president and director of governmental studies at the Brookings Institution, in Washington. He is the author of Making Nonprofits Work : A Report on the Tides of Nonprofit Management Reform, based on a study financed by the Aspen Institute’s Nonprofit Sector Research Fund.

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